Movements of the US dollar against currencies
The US dollar stabilized during Asian trading on Friday, after yesterday's volatility at the end of the New York session sparked by Trump that he would implement his threat to impose 25% tariffs on imports from Canada and Mexico soon, and also said that he was still considering whether oil imports would be exempted or not.
Trump also indicated that he would proceed with the imposition of tariffs on China, without specifying the tariff rate.
Now the markets are waiting for concrete announcements on these measures for greater clarity.
Traders are also looking forward to the PCE price index report later today, which is the Fed's preferred measure of inflation.
DXY
The dollar index fell slightly today as it still hovers around 108 levels, as data on Thursday showed a slowdown in US economic growth in the fourth quarter, despite consumer spending increasing at its fastest pace in almost two years.
The GDP report released on Thursday confirmed that the economy, especially the consumer, remains strong, and that there is no risk of a recession in the near term. This gives the Fed the ability to be patient about lowering interest rates.
The Fed kept interest rates unchanged last Wednesday, indicating that it expects further progress on inflation while recognizing the strength of the economy, and its Chairman Jerome Powell said that there will be no rush to cut them again, although he also hinted that there is still room for easing.
EURUSD
The euro rose slightly during today's trading on Friday, now that the pair was heading for a weekly decline of 1%, especially after the European Central Bank cut interest rates on Thursday and directed policymakers to make an additional cut next March.
GBPUSD
Traders expect a similar result at the Bank of England's monetary policy meeting next week, at which a 25 basis point interest rate cut was priced in.
The pair is on track to lose 0.7% this month.
The British pound faced enormous pressure at the beginning of the month after investors heavily sold British government bonds and the currency in a move that sparked concerns about Britain's finances.
USDJPY
The Japanese yen fell on Friday and the dollar-yen pair rebounded from near its lowest levels in a week, after Bank of Japan Governor Kazuo Ueda said the central bank should maintain a loose monetary policy to ensure that core inflation gradually accelerates towards its 2% target.
However, the yen remains up by more than 0.7% for the week so far and is set to rise by 1.6% for the month, marking its best January performance in seven years.
The currency was supported by expectations of an interest rate hike by the Bank of Japan this year, as deputy governor Ryuzo himino said on Thursday that the central bank will continue to raise interest rates if the economy and prices move in line with the bank's expectations.
Data showed on Friday that core inflation in Tokyo reached 2.5% to record the fastest annual pace in almost a year.
USDCAD
The Canadian dollar pair is still trading near five-year highs and is heading for a weekly rise of about 1%.
USDMXN
The Mexican peso is recovering somewhat today after falling sharply during the previous session, although it remained on track for its worst weekly performance since October with a decline of close to 2%.
The Mexican peso and the Canadian dollar have been the most affected by Trump's statements so far.
AUDUSD
The Australian dollar rose by 0.25% to 0.6224 US dollars, but was set to record a weekly decline of 1.4%, its sharpest in more than a month.
Data earlier this week showed that Australian consumer prices rose at their slowest pace in almost four years in the last quarter of December, which prompted markets to intensify bets on an interest rate cut by the Reserve Bank of Australia next month.
